Advance Planning Minimizes Truckstop Losses from Natural Disasters
July 1, 2011
Whether it is a severe winter storm, a hurricane or an earthquake, natural disasters and extreme weather can knock out power, disrupt the fuel supply, and leave the nation’s truckstops and travel plazas scrambling to keep America moving. NATSO members play a crucial role in ensuring emergency vehicles, disaster relief and the traveling public can get where they need to go.
“In the nature of the business we’re in, we’re the lifeline to the person traveling up and down the road. If there is inclement weather while people are on the road, they come to us for refuge,” said Rex Davis, president of Melvin L. Davis Oil Co., which operates two locations in Virginia. “We also get contacted by local emergency responders to make sure we have power and that our fuel supply is good.”
To ensure they can keep their doors open when the power is out, several NATSO members have invested in generators.
“When you have power outages in this business, it takes down everything. You’re not working and that cannot happen,” said Chauncey Taylor, owner of Johnson’s Corner in Loveland, Colo.
Taylor has two diesel-powered generators—one for the main building and another for the fuel dispensers. He relies on the units about once a month.
“We get storms here that knock down some of the aboveground power lines we have,” Taylor said. “The generators are tied in such that if they sense a fluctuation, they will turn on.”
Davis started researching generators in 2003 when Hurricane Isabel, the costliest and deadliest hurricane in the 2003 Atlantic hurricane season, knocked out power for days in Virginia.
“We did short-term rentals on them and we decided it would be more cost efficient to just go ahead and secure one generator that we can move between the facilities if we need to,” Davis said.
With his generator, Davis can run the entire building, including the quick-serve restaurant, travel center and fuel pumps. The generator delivers twice the power Davis needs, and he stressed how important it is to run the generator under load to ensure it is running properly.
Davis paid about $50,000 for a used generator from his local Caterpillar dealer. Part of the cost for the unit was for the necessary cables. “The cables are more expensive than you’d think, so be prepared to spend a few thousand dollars,” he said.
Both Davis and Taylor said the generators pay for themselves.
“We had a situation last year where everybody was closed. We received all of those customers who couldn’t be serviced anywhere else along the Interstate. With that you gain business, but you also ensure you’re not losing business transactions,” Taylor said.
Taylor purchased his first generator in 1996 for about $25,000 and a second, larger unit in 2005 for $40,000. “They will last as long as you maintain them. We do a monthly preventative and every year we have a service company that comes out and calibrates it when needed,” he said.
The generators do require regular upkeep. Davis tests his generator quarterly. “Sometimes if the generators haven’t been used in a long time, they may not function properly,” he said.
Taylor uses winter-blend diesel fuel in the generator so it is protected against freezing if the fuel sits in there until winter.
During an emergency, utilities and municipalities are often in need of fuel deliveries that can keep their responders up and running.
Sean Flynn, owner of Flynn’s Truck Plaza in Shrewsbury, Mass., has 20 mobile fueling trucks, which can be used during an emergency. “Back in 2000 with Y2K, we had trucks on site for utilities in case they had issues. We have used them for some fleets and when the power is out here we can pump out of the trucks, as well,” he said.
Flynn said he has also talked with the local fire department and ambulance companies about fueling. “That gives them a back door if they ever need it,” he said.
During a natural disaster, supply of product can be an issue. “If we’ve got our eye on the ball, we’re topping off our tanks two to three days prior to any event like a severe storm. That buys us time in the event that the carrier can’t get on the road,” Davis said.
When supply disruptions do occur, prices can spike. State attorneys general are often driven to launch price gouging investigations when prices increase following a natural disaster.
Twenty-eight states and the District of Columbia have price gouging laws on the books. Those laws are typically triggered when the governor declares a state of emergency, so retailers should monitor conditions in their state when disaster strikes.
“The most important thing operators can do is to keep records of their price increases,” said Holly Alfano, NATSO’s vice president of government affairs. “That way they can show what their costs are.”
Alfano noted that, based on simple economics, people sometimes use price as a way to cut demand so consumers won’t stockpile. However, she said once price gouging legislation takes effect, Retailers will want to ensure they comply with regulations.
Price gouging investigations typically prove that fuel price increases were caused by the retailers’ cost. For example, despite numerous investigations into price gouging after Hurricane Katrina, the Federal Trade Commission said there was limited evidence of price gouging in the weeks after the hurricane, noting that soaring prices were mainly due to market forces. However, the burden to prove costs rests with the retailer and documenting costs is key.
Price Gouging Legislation State to State
Not all states have price gouging legislation on the books and it can vary widely among those that do. Here is a sample of laws from around the country.
Connecticut: Prohibits price increases for any item during a federal- or state declared disaster.
Idaho: Prohibits “excessive or exorbitant” prices for consumer fuel, food, pharmaceuticals or water during a state-declared emergency. Court may consider additional costs incurred because of the disaster or emergency in determining whether a price was excessive or exorbitant.
Virginia: Prohibits “unconscionable” prices for necessities during a declared state of emergency. Courts will consider whether price charged grossly exceeded the price charged for the same or similar products in the 10 days prior to the emergency. Consideration is also given to whether an increase in price was attributable “solely to additional costs incurred” by the seller.
West Virginia: Prohibits prices at more than 10 percent above the price for necessary goods and services during the 10 days before a declared emergency unless the increase is attributable to increased costs associated with providing the good and/or service during the emergency.
Industry Aids in Relief Efforts
The deadly tornadoes that ravaged parts of the country earlier this year have devastated communities where NATSO members live and work, and truckstop operators and their industry suppliers have rallied to boost relief efforts.
In Oklahoma, Love’s Travel Stops & Country Stores donated $150,000 to local chapters of the United Way to help Joplin, Mo., and communities throughout Oklahoma recover and rebuild from the storms. Love’s is based out of Oklahoma, which was among the states hit by tornadoes.
“Our hearts go out to those who were affected by these tornadoes. Love’s has been impacted by tornadoes in our history, so we know what it’s like to rebuild,” said Love’s Chairman and Chief Executive Officer Tom Love.
Joplin, Mo., was hit with one of the deadliest storms in history. To support efforts there, Love’s made financial contributions to the Heart of Missouri United Way, and has assisted with in-kind donations as well. The Love’s Joplin location donated batteries and flashlights to a local hospital that was directly hit by a tornado, and they donated water to a community shelter.
The Joplin 44 Petro in Joplin, Mo., part of the Iowa 80 Group, was unharmed, but 18 employees did lose their homes as the tornado ripped through the area. Iowa 80 Group locations are taking donations for the Greater Ozark Area Red Cross and have set up a relief fund for employees who lost their homes. “To date we have raised over $3,000 for the Red Cross at our Joplin location alone,” said Heather DeBaillie, marketing manager for Iowa 80Group.
In Tuscaloosa, Ala., which was also hit by powerful tornadoes, Randall Reilly Publishing has created a fund to aid in the relief effort and is allowing employees to volunteer their time to help.
“Being one of the largest employers in the community, we said we’re going to take care of our own and take care of the community,” said Robert Lake, senior vice president, acquisitions/business development for Randall Reilly Publishing.
Randall Reilly Publishing established a fund for its own donations and for those made by employees, customers and vendors. “We administer that back out to affected employees as the need arises,” Lake said.
However, employees wanted to do more than simply write a check. “We looked at our 350 employees and everybody wanted to do something that was helpful,” Lake said. That’s why Randall Reilly Publishing is giving its employees one paid day off a week to volunteer. The human resources department sends out a daily email alerting employees to who needs what, such as someone with a chainsaw to cut trees out of a yard, or man power to clear debris.
“We still have a business to run, but if somebody wants to go and volunteer, they can go with the permission of their supervisor,” Lake said.
Lake said the human resources department is very involved in the process and watches the program closely.
“It is as healthy for the individuals who weren’t affected to volunteer as the ones who are receiving the help,” Lake said.
This article originally ran in Stop Watch magazine. Stop Watch provides in-depth content to assist NATSO members in improving their travel plaza business operations and provides context on trends and news affecting the industry.
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